November 17, 2020

When a Square Foot Is Not a Square Foot: Understanding How Office Space Is Measured In NYC

When searching for office space in NYC the “Rentable Area” is the cause of greatest confusion and contention for companies new to the process. It is important to understand the various definitions (usable, rentable, carpetable and loss factor), how the market works and to take a deep breath and just accept, New York is different.

The “Rentable Area”, is the area quoted by the landlord and is the square feet used to multiply the rent to determine your annual rent. The problem is, it does not relate to the actual square feet you occupy. This is called the “Usable Area” and to get to the “Rentable Area” a “Loss Factor” is added to cover the common areas in the building.

But here is the rub, in NY the loss factor is calculated not by an exact measurement, but by what the Landlord thinks the ‘market will bear’. On a full floor that is currently approx. 27% and on a shared floor up to 37%.

To determine the usable area, measure the floor to the outside surface of the building and subtract the spaces for general building functions including elevators, stairs, HVAC, fire towers and nonexclusive telecom/tech rooms and shafts. For multi-let floors, you just measure to the demised walls which is why the shared corridors, bathrooms, lobbies, etc add even more to the loss factor.

The key is to assess the ‘efficiency’ of the floor to check it meets your current and growth expectations. To do this architects and designers will consider the ‘carpetable area’ which is exactly what it says, any area you can lay carpet. By undertaking space planning on several spaces, you can determine which office best fits your operation and whether the “Rentable Area” is worth paying for.  It is a comparable method between options which should drive your decision making and negotiations rather than getting caught up in the idiosyncrasies of how the floor area is measured.